INTERACTIVE TELEVISION NETWORKS, INC. INCENTIVE STOCK OPTION AGREEMENT
EXHIBIT
10.11
THIS
INCENTIVE STOCK OPTION AGREEMENT ("Agreement"), is made as of the ______ day
of
_______, 200_ by and between Interactive Television Networks, Inc., a Nevada
corporation (the "Company"), and ___________ ("Optionee").
R
E C I T
A L
Pursuant
to the 2005 Equity Incentive Plan (the "Plan") of the Company, the Board of
Directors of the Company or a committee to which administration of the Plan
is
delegated by the Board of Directors (in either case, the "Administrator") has
authorized the granting to Optionee of an incentive stock option to purchase
the
number of shares of Common Stock of the Company specified in Section 1 hereof,
at the price specified therein, such option to be for the term and upon the
terms and conditions hereinafter stated.
A
G R E E
M E N T
NOW,
THEREFORE, in consideration of the promises and of the undertakings of the
parties hereto contained here-in, it is hereby agreed:
1. Number
of Shares; Option Price.
Pursuant to said action of the Administrator, the Company hereby grants to
Optionee the option ("Option") to purchase, upon and subject to the terms and
conditions of the Plan, _________ shares of Common Stock of the Company
("Shares") at the price of $_____ per share.
2. Term.
This
Option shall expire on the day before the ______ [fifth: 10% stockholder]
anniversary of the date of grant of the Option (the "Expiration Date"), unless
such Option shall have been terminated prior to that date in accordance with
the
provisions of the Plan or this Agreement. The term "Affiliate" as used herein
shall have the meaning as set forth in the Plan.
3. Shares
Subject to Exercise.
This
Option shall be exercisable in installments as to [___% of the Shares on and
after the first anniversary of the date hereof, ___% of the Shares on and after
the second anniversary of the date hereof, ___% of the Shares on and after
the
third anniversary of the date hereof and ___% of the Shares on and after the
fourth anniversary of the date hereof or define other milestones], provided,
however,
that an
installment shall not become exercisable if the Optionee is not in the employ
of
the Company, or its Affiliate, as of such anniversary date. Once exercisable,
the Option shall thereafter remain exercisable as to such Shares for the term
specified in Paragraph 2 hereof, unless Optionee's employment is terminated
pursuant to Paragraph 6 hereof or the Option is terminated pursuant to a
Corporate Transaction (as defined in
Paragraph
15 hereof). The Administrator may condition the exercise of the Option on the
Optionee's entering into a shareholders agreement with the Company and other
shareholders of the Company which will restrict the transferability of the
Shares and contain other customary provisions including rights of repurchase
or
first refusal on the part of the Company and may include "tag along" rights
and/or "drag along" rights.
4. Method
and Time of Exercise.
The
Option may be exercised by written notice delivered to the Company at its
principal executive office stating (i) that Optionee is in compliance with
the
non-compete provisions of Paragraph 16 hereof, (ii) that Optionee has no plan
to
violate Paragraph 16 in the future, (iii) that Optionee agrees to notify the
Company within 10 days of a violation of Paragraph 16 hereof, and (iv) the
number of shares with respect to which the Option is being exercised together
with:
(A) a
check
or money order made payable to the Company in the amount of the exercise price
and any withholding tax, as provided under Paragraph 5 hereof; or
(B) the
tender to the Company of shares of the Company's Common Stock owned by Optionee
or surrender of shares of Common Stock then issuable upon exercise of the Option
having a fair market value not less than the exercise price, plus the amount
of
applicable federal, state and local withholding taxes so long as such tender
does not, in the Company’s judgment, have an adverse financial or tax accounting
effect on the Company; or
(C) the
Optionee's full recourse five-year promissory note with interest at the
applicable federal rate (the AFR rate) and secured by a pledge of the shares
being acquired in forms approved by the Company with all proceeds of any sale
to
be applied first to retire in full the note (including any accrued interest);
or
(D) if
any
other method such as cashless exercise is expressly authorized in writing by
the
Administrator, in its sole discretion, at the time of the Option exercise,
the
tender of such consideration having a fair market value not less than the
exercise price, plus the amount of applicable federal, state and local
withholding taxes.
Only
whole shares may be purchased.
5. Tax
Withholding.
In the
event that this Option shall lose its qualification as an incentive stock
option, as a condition to exercise of this Option, the Company may require
Optionee to pay over to the Company all applicable federal, state and local
taxes which the Company is required to withhold with res-pect to the exercise
of
this Option. At the discretion of the Administrator and upon the request of
Optionee, the minimum statutory withholding tax require-ments may be satisfied
by the withholding of shares of Common Stock of the Company other-wise issuable
to Optionee upon the exercise of this Option.
6. Exercise
on Termination of Employment.
If for
any reason Optionee ceases to be employed by the Company or any of its
Affiliates (such event being called a "Termination"), other than For Cause,
as
defined below, this Option (to the extent then exercis-able) may be exercised
in
whole or in part at any time within [the term specified in Paragraph 2
hereof][{___ days}{one year} of the date of such Termination], but in no event
after the earlier of the Expiration Date or a Corporate Transaction which
terminates the Option pursuant to Paragraph 15 hereof. In the event this Option
is treated as a nonqualified stock option, then and to that extent, "employment"
would include service as a director, consultant or adviser. For purposes of
this
Agreement, Optionee's employment shall not be deemed to terminate by reason
of a
transfer to or from the Company or an Affiliate or among such entities, or
sick
leave, military leave or other leave of absence approved by the Administrator,
if the period of any such leave does not exceed 90 days or, if longer, if
Optionee's right to reemployment by the Company or any Affiliate is guaranteed
either contractually or by statute. For purposes of this Agreement, "For Cause"
shall mean the termination of Optionee's employment by the Company or any of
its
Affiliates due to Optionee's (a) wilful breach or habitual neglect or continued
incapacity to perform Optionee's required duties, or commission of acts of
dishonesty, fraud, misrepresentation or other acts of moral turpitude as would
interfere with the effective performance of Optionee's duties, or (b)
termination for cause under any employment agreement between the Company and
the
Optionee (as defined therein). In the event Optionee's employment by the Company
or any of its Affiliates is Terminated For Cause, then the Option shall cease
to
be exercisable as of the date of such Termination.
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7. Nontransferability.
This
Option may not be assigned or transferred except by will or by the laws of
descent and distribution, and may be exercised only by Optionee during the
Optionee's lifetime and after the Optionee's death, by the Optionee's personal
representative or by the person entitled thereto under the Optionee's will
or
the laws of intestate succession.
8. Optionee
Not a Stockholder.
Optionee shall have no rights as a stockholder with respect to the Common Stock
of the Company covered by this Option until the date of issuance of a stock
certificate or stock certificates to the Optionee upon exercise of this Option.
No adjustment will be made for dividends or other rights for which the record
date is prior to the date such stock certificate or certificates are
issued.
9. No
Right to Employment.
Nothing
in the Option granted hereby shall interfere with or limit in any way the right
of the Company or of any of its Affiliates to terminate Optionee's employment
or
consulting at any time, nor confer upon Optionee any right to continue in the
employ of, or consult with, the Company or any of its Affiliates.
10. Modification
and Termination.
The
rights of Optionee are subject to modification and termination in certain events
as provided in Sections 6.1 and 6.3 of the Plan.
11. Restrictions
on Sale of Shares.
Optionee repre-sents and agrees that, upon the Optionee's exercise of this
Option, in whole or in part, unless there is in effect at that time under the
Securities Act of 1933 a registration statement relating to the Shares issued
to
the Optionee, the Optionee will acquire the Shares issuable upon exercise of
this Option for the purpose of investment and not with a view to their resale
or
further distribution, and that upon each exercise thereof the Optionee shall
furnish to the Company a written statement to such effect, satisfactory to
the
Company in form and substance. Following the Company becoming eligible to use
Form S-8, the Company will register the Shares under the Securities Act of
1933.
Optionee agrees that any certificates issued upon exercise of this Option may
bear a legend indicating that their transferability is restricted in accordance
with applicable state and federal securities law. Any person or persons entitled
to exercise this Option under the provisions of Paragraphs 6 and 7 hereof shall,
upon each exercise of this Option under circumstances in which Optionee would
be
required to furnish such a written statement, also furnish to the Company a
written statement to the same effect, satisfactory to the Company in form and
substance.
12. Plan
Governs.
This
Agreement and the Option evidenced hereby are made and granted pursuant to
the
Plan and are in all respects limited by and subject to the express terms and
provisions of the Plan, as it may be construed by the Administrator. It is
intended that this Option shall qualify as an incentive stock option as defined
by Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and this Agreement shall be construed in a manner which will enable this Option
to be so qualified. Optionee hereby acknowledges receipt of a copy of the
Plan.
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13. Notices.
All
notices to the Company shall be addressed to the Corporate Secretary at the
principal executive office of the Company at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and all notices to Optionee shall be addressed to
Optionee at the address of Optionee on file with the Company, or to such other
address as either may designate to the other in writing. A notice shall be
deemed to be duly given if and when enclosed in a properly addressed sealed
envelope deposited, postage prepaid, with the United States Postal Service.
In
lieu of giving notice by mail as aforesaid, written notices under this Agreement
may be given by personal delivery to Optionee or to the Corporate Secretary
(as
the case may be).
14. Sale
or Other Disposition.
Optionee understands that, under current law, beneficial tax treatment resulting
from the exercise of this Option will be avail-able only if certain requirements
of the Code are satisfied, including without limitation, the requirement that
no
disposition of Shares acquired pursuant to exercise of this Option be made
within two years from the grant date or within one year after the transfer
of
Shares to the Optionee. If Optionee at any time contemplates the disposition
(whether by sale, gift, exchange, or other form of transfer) of any such Shares,
the Optionee will first notify the Company in writing of such proposed
disposition and cooperate with the Company in complying with all applicable
requirements of law, which, in the judgment of the Company, must be satisfied
prior to such disposition. In addition to the foregoing, Optionee hereby agrees
that before Optionee disposes (whether by sale, exchange, gift, or otherwise)
of
any Shares acquired by exercise of this Option within two years of the grant
date or within one year after the transfer of such Shares to Optionee upon
exercise of this Option, Optionee shall promptly notify the Company in writing
of the date and terms of the proposed disposition and shall provide such other
information regarding the Option as the Company may reasonably require
immediately before such disposition. Said written notice shall state the date
of
such proposed disposi-tion, and the type and amount of the consideration to
be
received for such Share or Shares by Optionee in connec-tion therewith. In
the
event of any such disposition, the Company shall have the right to require
Optionee to immediately pay the Company the amount of taxes (if any) which
the
Company is required to withhold under federal and/or state law as a result
of
the granting or exercise of the Option and the disposition of the
Shares.
15. Corporate
Transactions.
In the
event of a Corporate Transaction (as defined below), the Administrator shall
notify Optionee at least 30 days prior thereto or as soon as may be practicable.
To the extent not previously exercised, this Option shall terminate immediately
prior to the consummation of such Corporate Transaction unless the Administrator
determines otherwise in its sole discretion; provided, however, that the
Administrator, in its sole discretion, may (i) permit exercise of this Option
prior to its termination, even if this Option would not otherwise have been
exercisable, and (ii) provide that this Option shall be assumed or an equivalent
option substituted by an applicable successor corporation or any Affiliate
of
the successor corporation in the event of a Corporate Transaction. A "Corporate
Transaction" means a liquidation or dissolution of the Company, a merger or
consolidation of the Company with or into another corporation or entity, a
sale
of all or substantially all of the assets of the Company, or a purchase or
other
acquisition of more than 50 percent of the outstanding capital stock of the
Company in a single transaction or a series of related transactions by one
person or more than one person acting in concert.
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16. Non-Compete
Agreement.
Notwithstanding anything to the contrary provided herein, as
a
condition to the receipt of Shares pursuant to the exercise of this Option,
at
any time during which this Option is outstanding and for six months after any
exercise of this Option or the receipt of Shares pursuant to the exercise of
this Option, Optionee shall not directly or indirectly, as agent, employee,
consultant, stockholder, partner or in any other capacity, own, operate, manage,
control, engage in, invest in or participate in any manner in, act as a
consultant or advisor to, render services for, or otherwise assist any person
or
entity that engages in or owns, invests in, operates, manages or controls,
any
venture or enterprise that directly or indirectly competes with the Company,
provided,
however,
that
nothing contained herein shall be construed to prevent Optionee from investing
in the stock of any competing corporation listed on a national securities
exchange or traded in the over-the-counter market, but only if Optionee is
not
involved in the business of said corporation and if Optionee (together with
Optionee’s spouse, parents, siblings, and children) does not own more than an
aggregate of 5% of the stock of such corporation. Optionee agrees to notify
the
Company within 10 days of any violation of this Paragraph 16. Failure to comply
with this Paragraph 16 shall cause such Option and the exercise or issuance
of
Shares hereunder to be rescinded and the benefit of such exercise or issuance
to
be repaid to the Company. Optionee agrees and understands that Optionee’s
failure to comply with this Paragraph 16 will subject Optionee’s benefit from
the Option to be forfeited and repaid to the Company, and Optionee agrees to
do
so within 10 days of notification by the Company.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
and year first above written.
By
________________________
Name:
Title:
OPTIONEE
By___________________________
Address:
___________________________
___________________________
___________________________
___________________________
Social
Security Number
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